EE left furious at 'massive' spectrum licence fee hikes

EE’s CEO Olaf Swantee has thrown down the gauntlet to Ofcom’s proposals to increase licence fees by saying the regulator’s plans could impact the rollout of 4G.

The head of the UK’s biggest operator reacted furiously to the proposals, which were outlined last month. EE, along with its rivals, face a hike in how much money they pay for spectrum each year. Under the plans, which would take effect from next year after a consultation period, EE would have to pay £107m, up 328% on what it normally pays.

Operators are increasingly concerned about the implications of Ofcom’s plans but Swantee was the first to object publicly to the proposals, dubbing them a ‘massive’ increase. He said: ‘It’s disproportionate, particularly when the agenda of this country is around investment and rolling out further jobs. It’s important to deal with unemployment and digital infrastructure underpins the economy.

‘We are trying to close the gap with massive investment but if digital infrastructure continues to be important and crucial, why isn’t the regulator focused on making investment easier rather than handing down extra additional licence fees that further impact the revenue streams of the operators?’

Swantee said if the regulator ploughs ahead with its plans, it is consumers and businesses in some of the UK’s most remote areas that could suffer. Like its rivals, EE has pledged to substantially increase coverage with plans to offer its 4G service to 98% of the population by the end of 2014. Swantee said: ‘I think it’s definitely going to have an impact on the appetite of anyone to invest in the UK. You could end up with a weaker network infrastructure because people won’t have an appetite to invest. What they are proposing will provide short term revenue but it could have an impact on the roll out of a 4G network.’

Swantee was speaking as the operator released its results for the three months to 30 September. It could have close to two million 4G customers by the end of this year, with the operator adding 493,000 4G customers in its most recent trading quarter to bring its next generation base to almost 1.2m.

The business continued to be hit by the effects of regulation. Service revenue was down 3.3% to £1.45bn, which was an improvement on the second quarter shrinkage of 4.4%. Excluding revenue, sales were down 0.6%.

Swantee said the decision to offer 4G tariffs starting from £18.99 was not needlessly discounting the product, despite him previously saying consumers should expect to pay a premium price for a premium product like 4G. He said: ‘The £18.99 entry level tariff opens up new customers segments and over time we will be able to upsell them into better tariffs.’